Daisy merges with Virgin Media O2 to create major new force in telecoms
Lancashire-based telecoms group Daisy is to merge its business to business operations with Virgin Media O2 to create what it describes as “a major new force” in the UK business communications and IT sector.
With annual combined annual revenues of around £1.4 billion, the new entity, formed of substantially all of Virgin Media O2 Business and Daisy Group, will be consolidated by Virgin Media O2 with Daisy Group holding a 30% stake.
The deal is value-accretive for all parties and is projected to drive further growth through greater scale, efficiencies and a combined set of products.
The company will be led and chaired by Daisy Group founder, Matthew Riley, and Jo Bertram, Managing Director of Virgin Media O2 Business, as CEO.
The management team will combine “the best talent from both” organisations.
At the outset, both businesses will operate under their separate brands from their current office bases.
Headquarted in Nelson, Lancashire, where the business was formed in 2001, there are 1400 Daisy employees across 9 sites in the UK – Nelson, Sheffield, Birmingham, London, Sidcup, Basildon, Bournemouth, West Bromwich and Prudhoe.
The company will be supported by fixed and mobile connectivity wholesale agreements with Virgin Media O2, and supplier arrangements with the two global giants that sit behind the company Telefónica and Liberty Global. These will “leverage high-growth products and services from across the portfolio of those wider shareholder groups.”
Virgin Media O2’s fixed and mobile wholesale operations, which include smart metering and connectivity to MVNO customers, will remain fully owned within Virgin Media O2.
Daisy Group Founder and Chairman, Matthew Riley, commented: “This is a significant milestone in Daisy’s 24-year history. This transformational transaction will revolutionise the telecommunications and IT landscape and create the most comprehensive offering for businesses of all sizes across the UK. Growth is top of the political and business agenda – inextricably linked to this is access to world-class IT and communications infrastructure that is integrated and can scale.”
Riley added: “Our new entity, which brings together two highly successful companies, will deliver a comprehensive solution for the fast-changing needs of UK organisations supported by specialist teams that have a relentless focus on customer service. It will be driven by the entrepreneurial spirit for which we are known and will catalyse the next phase of our ambitious growth plans.”
Lutz Schüler, CEO of Virgin Media O2, said: “Combining Virgin Media O2 Business with Daisy Group is the perfect pairing and creates a new British business connectivity powerhouse and greater competition in the market. For us, it’s a big step forward in our journey to boost B2B growth and provide UK businesses of all sizes with the best digital and connectivity offerings. Following completion, the new company will have the scale, talent, focus and infrastructure needed to drive digital transformation and provide business customers with an innovative one-stop shop for all their communications and IT needs. We can’t wait to get started on this next chapter in partnership with Daisy.”
Based on full year 2024 performance, the entity will have approximate pro forma revenues of £1.4 billion, Adjusted EBITDA of £150 million and Adjusted EBITDA less Capex of £100 million, and is expected to deliver around £600 million of operational synergies on a net present value basis, including integration costs, primarily attributable to cost savings. This equates to a pre-tax annual run-rate of ~£70 million by 2030.
The transaction will be structured through the contribution of an approximately £425 million secured intercompany loan by Virgin Media O2 and approximately £835 million of debt by Daisy Group.
Virgin Media O2 is set to raise additional financing at its cost of debt at closing, enabling the repayment of existing Daisy facilities through a second secured intercompany loan.
Founded by Matthew Riley in 2001, Daisy offers cloud, communications and IT solutions to businesses and has expanded the business organically and by acquisitions over the past two decades.
The transaction is expected to close in early H2 2025, subject to customary regulatory approvals, with further director and management announcements occurring in due course.
In connection with the transaction, advisers for Virgin Media O2 and its shareholders include Jefferies as financial adviser and Deloitte supporting on financial due diligence and tax. Legal advisers include A&O Shearman, Simmons & Simmons and Ropes & Gray providing legal advice in relation to the financing.
For Daisy and its shareholders, Houlihan Lokey and EY are acting as financial advisers, PwC acting as tax advisers, and Paul Weiss, Clifford Chance and DWF as legal advisers.
